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Treasury Bills and Government Bonds

Treasury Bills and Government Bonds

You can prefer to invest in Treasury Bills and Government Bonds if you want to guarantee your fixed income security investments under the Republic of Turkey Undersecretariat of Treasury.

Features:

• Treasury Bills and Government Bonds are Government Domestic Borrowing Securities (GDBS) issued by the state in order to finance the budget deficits based on the current year’s budget law. • If the GDBSs issued by the Undersecretariat of Treasury are hold until the maturity date, they guarantee a certain return. If they are turned into cash before their maturity date, they can generate higher return than expected or less return since they will be sold through the current prices in the market. • GDBSs with a maturity date less than 1 year are defined as Treasury Bills and the ones with a maturity date of 1 year or more are defined as Government Bonds. • GDBSs can be issued with coupon (coupon bearing) or without coupon (coupon bearing). Coupon payment rates of coupon bearing securities can have a fixed or variable interest. Variable interests of variable-interest securities are indexed to a value that serves as an indicator. CPI or GDBSs auction results made by the Undersecretariat of Treasury are accepted as the indicator. • GDBSs enable the investors to sell the security at any time before maturity and over the current interest rate according to the market conditions. • You can buy and sell TL denominated Treasury Bills and Government Bonds according to the market conditions and at the prices determined by our Bank through Isbank Internet Branch and call center, Bankamatiks and İşCep 24 hours a day and through our all Branches within the working hours. You can find our Daily Treasury Bill and Government Bonds buying and selling interest rates and prices in the “Prices and Rates” section on our Web Site. • Minimum transactions can be made as low as TL 100 nominal, and TL 10 nominal and its multiples thereafter. You can participate in bill and bond auctions initiated by the Republic of Turkey Undersecretariat of Treasury through our Bank.

• Your request for auction participation shall not be less than the minimum amount determined by the Republic of Turkey Undersecretariat of Treasury.

• A small fixed transaction fee is received from you upon your request.

• Money Market Fund (801)/Short-Term Bill and Bond Fund (808) at the amount that will cover the auction price or bond or bill that will be redeemed at the date of auction price payment is blocked from your investment account. If these do not exist, the free balance in your investment or current account or the available balance in your overdraft account is blocked.

• In the case that your auction bid is successful and finalized , an amount of cash is blocked from your investment account based on your auction winning bid amount.

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Types of T-Bills and G-Bonds

Domestic Government Bonds may be issued with coupon or without coupon. Coupon payment rates of coupon bearing securities can have a fixed or variable interest. Variable interests of variable-interest securities are indexed to a value that serves as an indicator. In the current situation, Consumer Price Index (CPI) and GDBS auction results made by the Undersecretariat of Treasury are accepted as the indicator for the coupon rates of variable-interest securities.

T-Bills and G-Bonds Without Coupon Payment (Discounted or Zero-Coupon):

Features:

• Does not involve any coupon payment during its maturity. • They are put up for sale by being discounted over its nominal value (maturity value) and through a certain interest rate. • Capital and interest payment is made at once at the maturity date.

Coupon Bearing Government Bonds:

Features:

• By making coupon payments on the dates specified in their first issue, they provide cash-flow for the investors throughout their maturity. • The maturity of the coupon payable Government Bonds are generally more than 1 year. • Coupon payments may be made monthly, quarterly, semi-annually and annually. • It provides re-investment opportunity through the periodic cash flows paid to the investors. ​

Types of Coupon Bearing Bonds

Fixed Coupon Government Bonds:

• Fixed coupon Government Bonds guarantee a fixed income for the investors throughout their maturity by making coupon payments on the coupon payment dates specified in their first issue and similarly over the fixed coupon rate specified in their first issue.• The capital is paid back on the date of maturity with the last coupon payment. • Fixed coupon bearing securities issued by the Undersecretariat of Treasury are issued with maturity varying between generally 2 years-10 years. • While they are issued through coupon payment once every 6 months, they may also be issued through coupon payment once every 3 months and once a year. • It is a more suitable investment tool for the investors who prefer to make long-term investments.

Variable Coupon Bearing Government Bonds:

• It provides cash-flow for the investors throughout their maturity by making coupon payments based on floating and market rates or coupon payments varying according to another index. • The first coupon rate that it will pay on the date of issue is determined and the next coupon rate is declared and announced to the public by the Undersecretariat of Treasury on each coupon payment date. • The capital is paid back on the date of maturity with the last coupon payment. • Variable coupon payable securities issued by the Undersecretariat of Treasury are issued with maturity varying between generally 2 years-10 years.• While they usually pay coupons once every 6 months, they may also pay coupons once every 3 months and once a year depending on the issue.

CPI Indexed Government Bonds:

• It provides cash-flow for the investors as of periods through CPI-Indexed coupon payments and capital. • It protects the investors against inflation by providing a return above the inflation rate. • CPI Indexed Government Bonds offers a different investment opportunity for the investors by means of giving real return guarantee. Inflation differential is added for the relevant coupon period over the coupon interest specified in the first issue of the security by the Undersecretariat of Treasury and according to the reference indexes declared by the Treasury. • In this way, capital payments of the bonds do not incur any loss in value and the purchasing power of the capital invested in CPI Indexed Government Bonds is protected. Regardless of the inflation level in the period until the maturity of the CPI Indexed Government Bonds, the real return paid is fixed. • The Consumer Price Index (CPI) declared by the Turkish Statistical Institute (TurkStat) is used in all the payments regarding the bond. Within this scope; in case that the reference index on the date of redemption is lower than the index on the date of issue, payment will be made over TL 100 nominal (value) at the maturity date. Therefore, there will not be any decrease in the capital in case of deflation throughout the maturity of the bond. • Related to the coupon payments; in case that the reference index on the date of coupon payment is lower than the index on the date of issue, coupon payment will be made over TL 100 nominal (value) and over the rate determined by the Treasury. In this way, the real return will not fall below the rate determined by the Treasury in any coupon period. • Please find more detailed information regarding the inflation-indexed bonds and reference indexes on www.hazine.gov.tr.

Taxation

• The earnings gained over the buying and selling of the Domestic Government Bonds (GDBS) issued after 01.01.2006 and their interest incomes are subject to 10 % withholding for legal persons other than real persons and stock corporations.

• You can receive further information related to taxation from the Tax Manual.​